The U.S. stock market seems positioned for a sharply lower start this morning, as the broader equity futures are currently down about 80 points. Last week, the market put in a highly volatile performance, leaving traders feeling quite unsettled. Many investors seem to have doubts that the Federal Reserve can bring inflation under control without derailing the economy in the process. The situation is further complicated by ongoing global supply-chain issues and the military conflict between Russia and Ukraine.
In economic news, traders will receive a few important reports this week. On Wednesday, the Consumer Price Index (CPI) for the month of April will be published. Most economists think the report will show that consumer prices moved up over 8% for the month, on a year over year basis. On Thursday, the Producer Price Index (PPI) will follow, providing additional information about the inflation outlook. It should also be noted that at the end of the week the University of Michigan will release its consumer sentiment numbers for the month of May. This issuance should be widely watched given that the consumer plays a key role in the broader economy. It remains to be seen if rising prices and a softer stock market will start to erode confidence.
In corporate news, the earnings season is still in progress, and a number of popular companies will be reporting results this week. Today, we will hear from Simon Property Group (SPG), one of the nation’s largest retail real estate operators. On Tuesday, Electronic Arts (EA), a major designer of digital games, and Hyatt Hotels (H) will be among the names that traders will be watching. Later in the week, we will hear from The Walt Disney Company (DIS). It should be noted that investors have been hard to impress in the current market environment. Many companies have posted decent results, but traders have not always reacted favorably.
From a technical perspective, the stock market has been quite choppy over the past several days. Traders seem to be in need of clarity, and have been reacting to corporate and economic developments in an exaggerated fashion. The broader S&P 500 Index is currently sitting just around the 4,100 level. Although it is not clear that this area will provide support, it should be noted that many stocks have already experienced significant declines, and lower valuations should attract bargain hunters at some point.
– Adam Rosner
At the time of this article’s writing, the author had a position in The Walt Disney Company (DIS).
